In one town, higher speeds are having both positive and negative demographic effects.

Back in 2009, Finland announced what might be the world’s most ambitious national broadband plan: a guaranteed minimum service level of 1Mbps for all homes and companies by 2010. That goal is then planned to be kicked up to 100Mbps, served via a fixed connection or wireless, by 2015 (Google Translate).

Three years into the program, Finnish government officials say they are well on the road to meeting that goal by providing subsidies mainly to local cooperatives that have sprung up to serve rural communities. To date, 86 percent of the 5.35 million Finnish population lives within two kilometers of a 100Mbps connection, and the expectation is that this will grow to 95 percent by 2015. By that definition, it looks like Finland will come very close to meeting its goal. (Finnish households are expected to pay for that final connection to the home, should they want the full 100Mbps fiber service.)

“I am confident. There is no reason why we [can’t meet this goal],” Juha Parantainen, the Vice Chair of the National Broadband Advisory Committee, told Ars. The Finnish government is expected to release a second interim evaluation in 2013.

As we reported earlier this year, the Finnish plan is part of the European Union’s Digital Agenda for Europe. Among other things, that plan requires member states to publish national broadband plans by the end of the year to bring a minimum level of 30Mbps service to all citizens by 2020. It also requires countries to bring speeds of 100Mbps to half of the EU’s households by 2020. (As one commenter pointed out, most of Denmark already has 32Mbps wireless coverage.) In other words, Finland is far surpassing what Brussels has mandated.

To be clear, the plan does not mean the Finnish government will pay for everyone’s Internet access. Rather, the government just wants to guarantee a minimum level of service and ensure that 100Mbps access is within two kilometers of all Finns no matter where they live. In Finland’s sparsely populated rural north and west, this is a particular challenge—not to mention that the ground is frozen solid for many months of the year in the remotest regions, meaning it's difficult to lay new cable.

Enlarge/ Finnish authorities expect 95 percent of its residents to live within two kilometers of a 100Mbps connection by the end of 2015.

Who really has 100Mbps in Finland now?

A closer look at what that actually means reveals that some of this service is actually via a mobile broadband service, which is generally slower and not always as reliable as a wired connection. Curiously, Parantainen also provided government figures showing half of all Finns currently have a 100Mbps connection available to their door. Of those 50 percent of the entire country, 40 percent are via served via cable modem and the remaining 10 percent over fiber. These figures show that only a small percent of Finns actually throw down for a 100Mbps fiber-to-the-home (FTTH) service.

The Finnish government said it would kick in €66 million ($85 million), while €25 million ($32 million) would come from the European Union, and €40 million ($52 million) from individual municipalities and towns. However, to the government’s surprise, major Finnish telecom operators can’t be drawn in even with a 67 percent government subsidy. Instead, most of the subsidies have been claimed by newly formed local cooperatives and smaller companies. But in the country’s most remote areas, operators are opting for wireless service rather than laying fiber-optics.

“The big picture is that nationwide operators are not interested in this project,” Parantainen added. “They have other things to do, like mobile broadband, and maybe they get more profit from this.

However, independent researchers think the government’s service claim (that half the country already has 100Mbps access) is dubious—and that calls the entire current state of Finland’s broadband upgrade into question.

“My gut feeling is that this is not the case: only some parts of the biggest cities have been actively marketed with 100Mbps connections by the operators,” Hannu Nieminen, a professor of communication policy at the University of Helsinki, told Ars.

Further, he argues, reaching the very last mile—for example, in the far northern region of Lapland—will be very difficult. And because the government lacks real regulatory or enforcement authority to make this happen, Nieminen says the policy doesn’t go far enough in terms of bringing real, significantly higher-speed service to the entire territory.

“Without new measures and targeting of the problems in the implementation process, the original goal will be difficult or even impossible to reach,” Nieminen wrote in a forthcoming academic paper, European broadband regulation: the "Broadband for all 2015" strategy in Finland.

“To keep the target intact, even stronger direct state intervention will become necessary.”

Enlarge/ Karvia is a small town of just about 2,500 people in rural, Western Finland.

Wait—in rural Finland, faster Internet causes what?

One of the first towns to take advantage of this government subsidy was a small town in Western Finland: Karvia, with a population of about 2,500 people. For two years, the town had 100Mbps service provided by a newly founded local company (partly owned by the town): Suupohjan Seutuverkko Oy.

“Our enterprises have been very pleased that we [use the new] network,” Tarja Hosiasluoma, the town’s municipal manager told Ars.

Karvia, she explained, has historically been a largely farming and small industrial community. Before getting the new 100Mbps fiber optic connection, she said, the town only had a weak DSL service of about 0.5Mbps.

“Sometimes when you’re paying some bills on your Internet bank, it would just stop,” she added.

Today, she pays €40 ($52) for a 20Mbps connection that includes TV over IP. For €10 ($13) more, she said, she could have the full 100Mbps, but she doesn’t feel that’s necessary.

Hosiasluoma said that Karvia—like many small towns around the world—faces a challenge of keeping its younger population local. With more reliable Internet, it lets more creative and freelance workers stay in town.

“They can do remote work at home and so they have moved back to Karvia,” she said. “People like artists and people who are designing buildings can work at home and I think that this was very important for us to do. Also, they can study at home because the network has made a possibility to study.”

But the town official admitted there may be a downside to better access, at least demographically speaking.

“In the first year we had nine children born. Normally we have 20 children [per year]—maybe [couples] are watching TV too much,” she said with a laugh.

A call for a stronger policy

In the forthcoming paper evaluating the efficacy of Finland’s broadband strategy (mentioned above), Hannu Nieminen, the Finnish professor, lamented the project has been “slow to gain ground.”

“Although charged with creating demand for the broadband connection, the campaign organization could not ‘sell’ or provide the actual connection—it could only encourage and advise potential users how to act to realize the local network,” he wrote.

Nieminen added that ultimately the larger telecom firms, like TeliaSonera, are the ones who decide whether to provide service. But worse still, he wrote, the application of the Finnish public subsidies is “extremely complicated.”

“The private investor (telecom operator, local cooperative, municipal company) has to pay the whole investment in total at the start, which can be recouped from state aid (one-third of the costs) only after the work has been completed,” he added.

Even worse, he argues that actually bringing 100Mbps of service to within two kilometers of all of Finland is going to be difficult financially. It can cost up to €53,000 ($68,000) per household in the most rural and remote regions.

“Regional authorities are struggling with excessive bureaucracy and also with the realization that the state aid, €66 million [$85 million] reserved for 2009-2015, will not be enough to fund all the planned local projects,” Nieminen concluded. “Nevertheless, in many regions good results have been achieved in expanding the broadband network, but it is difficult to say if they have succeeded because of the strategy or despite it.”

Nieminen said that today, fiber optic broadband is at the level of a basic public service (like electricity, water, or roads). However, he argues, the policy designed to spur higher availability and greater usage of 100Mbps service isn’t really achieving its goal.

“The Finnish strategy as it is does not seem to provide this but leaves it to market forces on one hand and to regional and local authorities on the other,” he told Ars. “The first actors have no obligation to fulfill their part, and the second actors are lacking realistic financial and political means.”

Of course, if they'd left it entirely up to the private sector, they'd all be on exabyte connections...

Sarcasm aside, I'm curious whether there's a correlation between fast, widely-available broadband and the degree of state intervention. Who paid for building out the networks in South Korea and Japan, for example?

* Suupohjan Seutuverkko installs the residential gateway for free when the fibre is being welded. If the gateway has to be delivered later, it costs 70 euros.

** Every FTTx-customer pays maintenance cost for Suupohjan Seutuverkko and service cost for the service provider. Maintenance cost is 24,60 euros/mo but the service costs depend on the service bought from the service provider. Underneath there are some examples of the services available in the FTTx-connection.

The cheapest provider they list in the examples "below" is 6.86 Euro for a 3M symmetric connection.

You have to start at 24.60 and then add the actual carrier prices to get the true monthly cost, unless you consider the 24.60 to be a separate utility cost...

Also, 1800 Euro to connect the home? I suppose it's a one-time fee, but that's around $2300. If FIOS had setup fees like that I doubt that as many people would be using it...

I suppose it's a one-time fee, but that's around $2300. If FIOS had setup fees like that I doubt that as many people would be using it...

According to my handy dandy financial calculator. $2,300 with an interest rate of 8% spread out over 10 years equals $27.90 monthly. So if the ISP wants the consumer to bear the FULL COST of the installation they should charge an additional $28 per month for 10 years.

Also, 1800 Euro to connect the home? I suppose it's a one-time fee, but that's around $2300. If FIOS had setup fees like that I doubt that as many people would be using it...

You might be surprised. Especially with new builds; it would probably get run as a matter of course. I wouldn't be surprised to see new developments or redevelopments running the basic infrastructure and making it part of the lot cost.

In the US it wouldn't be feasible to say 100% penetration of anything. However, I don't see why we couldn't a NASA-style incentive program. Like, $10,000 for every 100 households with availability for 100Mbps with per-household final install costs of less than $1,500. Something like that. That would go a long way to defraying the install costs for the core infrastructure. Throw some QoS terms in there to limit oversubscribing to a reasonable level (e.g. no lower than 75% of maximum bandwith and for no more than 10% of the day). Sure, some people (my parents, for instance) would remain unserved, but I bet it would kick up the overall broadband levels pretty markedly. Then start worrying about the outliers.

Heck, in San Francisco my home is definitely within 1km of fiber lines, but there's no way I'm going to get anywhere near that fiber without paying thousands of dollars a month. My office is on the same street as the core of major fiber links downtown, and yet our connection bypasses all that in favor of a flaky, unreliable series of point-to-point wireless links because there's no economic way to make it work unless you're the 50-story building across the street.

* Suupohjan Seutuverkko installs the residential gateway for free when the fibre is being welded. If the gateway has to be delivered later, it costs 70 euros.

** Every FTTx-customer pays maintenance cost for Suupohjan Seutuverkko and service cost for the service provider. Maintenance cost is 24,60 euros/mo but the service costs depend on the service bought from the service provider. Underneath there are some examples of the services available in the FTTx-connection.

The cheapest provider they list in the examples "below" is 6.86 Euro for a 3M symmetric connection.

You have to start at 24.60 and then add the actual carrier prices to get the true monthly cost, unless you consider the 24.60 to be a separate utility cost...

Also, 1800 Euro to connect the home? I suppose it's a one-time fee, but that's around $2300. If FIOS had setup fees like that I doubt that as many people would be using it...

~47($61) euros/month for 100M/100M. Let's take a look at FIOS, 75/35 is $90/month. 7 years to even it out, and then it's cheaper.

~60($78) euros/month for 100M/100M + TV vs. $155. A little over 2 and a half years, and we're now cheaper

Also, that 1800 euros is an investment. You've increased your house's value by doing it as well.

Whenever I see those grand government projects that sound good, the economist in me wonders about the unseen effects. A bridge is built, but the resources came from somewhere and a multitude of projects where affected. Concentrated benefits are visible, but distributed costs require attention and imagination to be seen.

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups. -- Henry Hazlitt

Throw some QoS terms in there to limit oversubscribing to a reasonable level (e.g. no lower than 75% of maximum bandwith and for no more than 10% of the day).

I found out two weeks ago my ISP has 100+ households on a OC3 line. OC3 = "up to 155.52 Mbit/s (payload: 148.608 Mbit/s; overhead: 6.912 Mbit/s, including path overhead)". I pay for 12mbps, but I regularly get less than 2mbps at night.

While it would be nice if we could all have "free" high-speed internet connections simple market economics dictate this cannot work. The Big Government Europeans are about to learn the hard way that interference with with market forces can only end in disaster.

Frankly I think many people have woken up to the idea that government has no business being in the infrastructure business. From water to natural gas, every utility that is heavily government controlled and regulated experiences frequent services interruptions and consumer harm.On the other end of the spectrum the less regulated industries such as financial services, cable tv, and health insurance report absurdly high levels of customer satisfaction.

If the private sector is not providing internet access at these ridiculously high speeds then obviously the technology is not there yet, or the demand isn't there. There is no other explanation.

While it would be nice if we could all have "free" high-speed internet connections simple market economics dictate this cannot work. The Big Government Europeans are about to learn the hard way that interference with with market forces can only end in disaster.

Frankly I think many people have woken up to the idea that government has no business being in the infrastructure business. From water to natural gas, every utility that is heavily government controlled and regulated experiences frequent services interruptions and consumer harm.On the other end of the spectrum the less regulated industries such as financial services, cable tv, and health insurance report absurdly high levels of customer satisfaction.

If the private sector is not providing internet access at these ridiculously high speeds then obviously the technology is not there yet, or the demand isn't there. There is no other explanation.

I came shamefully close to falling for this until the end of the second paragraph.

Throw some QoS terms in there to limit oversubscribing to a reasonable level (e.g. no lower than 75% of maximum bandwith and for no more than 10% of the day).

I found out two weeks ago my ISP has 100+ households on a OC3 line. OC3 = "up to 155.52 Mbit/s (payload: 148.608 Mbit/s; overhead: 6.912 Mbit/s, including path overhead)". I pay for 12mbps, but I regularly get less than 2mbps at night.

Exactly why I would like to see some QoS terms for my hypothetical incentive program.

I don't mind a bit of oversubscribing, in fact in a controlled manner it can be useful. If they set up a self-healing network, so that when the trunk to unit A gets cut, it has links to B, C, and D that help take the load, are a net benefit. But the regular reports I see (and have experiences) of oversubscription levels limiting bandwidth at peak hours to relatively small percentages annoys me.

Especially because, around here, its not even proportional. To take your example, if your neighbor had a 2Mbps connection they'd get full performance, but you're getting 1/6 of yours.

How does this compare to the (landline) and electricity buildouts? I find it difficult to believe that we were able to do those decades ago but there needs to be all sorts of balking and debate at putting one more (thinner) wire. How did we resolve these issues socially? Surely there were the same kinds of questions, and maybe the same calls for leaving the rural areas in the dark, maybe the same screams against government getting involved. Somehow we ended up getting everyone covered then. It would be depressing to think that we've regressed too much to manage it now.

While it would be nice if we could all have "free" high-speed internet connections simple market economics dictate this cannot work. The Big Government Europeans are about to learn the hard way that interference with with market forces can only end in disaster.

Frankly I think many people have woken up to the idea that government has no business being in the infrastructure business. From water to natural gas, every utility that is heavily government controlled and regulated experiences frequent services interruptions and consumer harm.On the other end of the spectrum the less regulated industries such as financial services, cable tv, and health insurance report absurdly high levels of customer satisfaction.

If the private sector is not providing internet access at these ridiculously high speeds then obviously the technology is not there yet, or the demand isn't there. There is no other explanation.

Because health and internet service works so great in the US? You should be more concerned about what actually works, instead of being a blind follower to some ideology. As a side note, Scandianvia, Iceland and Finland are getting through this financial crisis much better than the rest of Europe and US. At the same time they got healthcare for everyone, political goals about broadband for every household, free education and so on. Yeah, those socialist countries never gets it right ...

Internet access really is one of the things where government control makes a lot of sense.

- Its essentially a pipe so there is not much innovation companies could bring to the front. If they provide fiber into every house and provide 100Mb internet they will be better than what 99.95% of private companies will offer for a long long loooong time.The other innovations private companies seem to add are useless email accounts, offered malware, "creative" pricing to squeeze the last possible drop out of its customers etc. I think we can all agree that we could live without those addons.

- I really wonder how much of the revenue of the big telecom companies is ads, the stupid little shops that are twice in every mall, and the stupid letters they send you in droves. If you could scrap that man could you provide a good service for a low amount of money.

- Pretty much everbody needs internet anyway so its a good common good like water or roads.

- Setting up a fiber network has a prohibitive cost so you end up with monopolies anyway and government monopolies are better than private monopolies at least in governments we are the voters/shareholders.

The alternative to this is what many European countries did by forcing the dominant (mostly ex-government) provider to carry traffic by competitors for reasonable prices. Works nice as well.

The North-American approach on the other hand is terrible. Soulcrushingly mindnumbingly terrible.

But... but.... public sector cannot possibly create any jobs/infrastructure/wellbeing/etc!!! You HAVE to leave it to the private sector because... well... Adam Smith's free market principles said so! Trust me I learned this on fox news.

But... but.... public sector cannot possibly create any jobs/infrastructure/wellbeing/etc!!! You HAVE to leave it to the private sector because... well... Adam Smith's free market principles said so! Trust me I learned this on fox news.

And which in General is true. Because private sectors tend to get bloated, have lots of wrong incentives, never change and are as innovative as cardboard. So in 99% of all cases its completely true that private services >> public ones.

Now this changes the moment you have a situation like broadband that everybody needs and that can not be build twice (like roads and to a lesser intent water pipes, broadband connections). Because in this scenario you take away the one thing that makes private companies so superior. Competition.

And a private company without effective competition is much worse than a public company because it will still follow its aim to maximize profit and without restraints from competition this means sucking your customers dry as effectively as possible. Public companies at least are only bloated and not outright evil.

Also public services can be quite efficient as Singapore shows. In the end a Country is not much else than a Company as well. And in the globalized world they compete for the best citizens as well. Only that it is much harder for citizens to leave, so only the small really international "countries" like Singapore tend to have really good public services. In contrast to most western governments, which have huge public sectors that by and large have much better job security and pension plans than their private sector compatriots for in general much more boring jobs and with lower requirements.

While it would be nice if we could all have "free" high-speed internet connections simple market economics dictate this cannot work. The Big Government Europeans are about to learn the hard way that interference with with market forces can only end in disaster.

Frankly I think many people have woken up to the idea that government has no business being in the infrastructure business. From water to natural gas, every utility that is heavily government controlled and regulated experiences frequent services interruptions and consumer harm.On the other end of the spectrum the less regulated industries such as financial services, cable tv, and health insurance report absurdly high levels of customer satisfaction.

If the private sector is not providing internet access at these ridiculously high speeds then obviously the technology is not there yet, or the demand isn't there. There is no other explanation.

Because health and internet service works so great in the US? You should be more concerned about what actually works, instead of being a blind follower to some ideology. As a side note, Scandianvia, Iceland and Finland are getting through this financial crisis much better than the rest of Europe and US. At the same time they got healthcare for everyone, political goals about broadband for every household, free education and so on. Yeah, those socialist countries never gets it right ...

Currently have a fiber cable right up at the corner of the house, going to take a few months until the main cable is complete through roughly 20km of forest though (wouldn't be surprised if it got delayed until after winter). Then we can enjoy 100Mbit connection for 43€ a month with no cap, the only downside was the 3000€ participation fee in the Project (site in swedish).

Also the numbers in the article number are probably greatly exaggerated, doubt even that many have 100Mbit connection in urban areas. Guess they did the usual and only considered whats inside the Ring III (the outmost of the three highways around the capital) to be Finland /sarcasm.

One thing thats true from the article is that the telecom operators are useless, they are actually degrading service in the most rural areas (removing copper lines and only offering very slow wireless)

Currently have a fiber cable right up at the corner of the house, going to take a few months until the main cable is complete through roughly 20km of forest though (wouldn't be surprised if it got delayed until after winter). Then we can enjoy 100Mbit connection for 43€ a month with no cap, the only downside was the 3000€ participation fee in the Project (site in swedish).

Also the numbers in the article number are probably greatly exaggerated, doubt even that many have 100Mbit connection in urban areas. Guess they did the usual and only considered whats inside the Ring III (the outmost of the three highways around the capital) to be Finland /sarcasm.

One thing thats true from the article is that the telecom operators are useless, they are actually degrading service in the most rural areas (removing copper lines and only offering very slow wireless)

This is why Australia's solution is without a doubt the best one. The government builds out and owns fiber to everone's house, and private ISPs rent access to that fiber to compete and provide service over the top of that infrastructure. No subsidies are required, as the buildout is paid for by subscriber revenue. And all ISPs are on a level playing field, with customers being able to switch to a number of competitors at any time.

Wireless is only used to cover the most remote 7%, not to hide the lack of true universal 100 Mbps service that the Finland government has put forth.

While it would be nice if we could all have "free" high-speed internet connections simple market economics dictate this cannot work. The Big Government Europeans are about to learn the hard way that interference with with market forces can only end in disaster.

Frankly I think many people have woken up to the idea that government has no business being in the infrastructure business. From water to natural gas, every utility that is heavily government controlled and regulated experiences frequent services interruptions and consumer harm.On the other end of the spectrum the less regulated industries such as financial services, cable tv, and health insurance report absurdly high levels of customer satisfaction.

If the private sector is not providing internet access at these ridiculously high speeds then obviously the technology is not there yet, or the demand isn't there. There is no other explanation.

Where on earth do you live????? I have never experienced water or gas outages. Even after a couple devastating tornados I still had gas and water. It's understandable to have that stuff knocked out in hurricanes and earthquakes but what kind of backwoods dump do you live in not to be able to rely on gas and water service?

EDIT: nevermind, my government supplied sarcasm detector went out again.

Currently paying 44,90e for 110Mbit.. 200Mbit upgrade would be only -> 54,90e Upload would be only 20Mbit iirc. No caps.

That's pretty good, where are you at? I pay $100CAD a month for 100/5 mbits. It comes with free hdtv though.

Finland, as the topic goes

However, I consider the prices a bit expensive - I don't live at capital area (or even central city area, 25km from my city's central) - at central areas things get cheaper, also 350Mbit connections available.